Attorneys cannot agree to settlements for clients

Jennifer Nelson
January 1, 2007
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The fact a party authorizes an attorney to enter settlement negotiations and knows the negotiations are occurring does not mean that the attorney has authority to approve a settlement, according to a ruling today by the Indiana Court of Appeals.

In Carol and David Bay v. Michael Pulliam and Cardinal Transportation, LLC, 49A05-0612-CV-704, the Court of Appeals reversed a Marion Superior Court decision that granted a motion to enforce settlement agreement in favor of Pulliam and Cardinal Transportation. At issue was whether a settlement between an attorney for the Bays and Pulliam's insurance company could be binding if the Bays did not agree to it.

Carol Bay was injured during a vehicle accident involving a Cardinal truck driven by Pulliam. The company and Pulliam were insured by Zurich Insurance, North America. The Bays hired the Nunn Law Office to represent them. The settlement negotiations were between the Nunn office and Zurich, which through correspondence disclosed various settlement demands and offers of settlement from Zurich. Attorney Ken Nunn signed each demand letter, and Zurich was told to contact Claims Manager Jeff Pryor to discuss settlement. On Jan. 3, 2006, Pryor communicated with Zurich advising, "Our client has accepted your offer in the amount of $16,700." A release form was then forwarded from Zurich to the Nunn office.

Carol Bay testified in court that on Jan. 2, 2006, she told Dean Arnold, another attorney in the Nunn office, that she needed to consult with her husband before accepting the settlement offer. When the Bays received the settlement offer on Jan. 17, 2006, they rejected it in writing by noting the rejection of the settlement in two separate locations.

The Bays appealed the motion to enforce settlement agreement, arguing that the "attorney for the Bays" did not have actual or apparent authority to make the settlement agreement. They conceded the law office could enter into settlement negotiations and also that the Bays knew of such negotiations, but not that Nunn's office could agree to any settlement. The Court of Appeals agreed with the Bays argument, stating there was no evidence that Carol Bay told Arnold to accept the Zurich offer.

Pulliam maintained that Arnold had authority to enter the binding agreement per the conversation between himself and Bay on Jan. 2, in which she said she wanted to "settle the case." That is not evidence that she accepted the offer or gave Arnold authority to do so, the court ruled.

Senior Judge Sullivan wrote in the opinion, "The law is clear that retention of an attorney by a client does not constitute implied authority to settle a claim nor does it constitute a manifestation to third parties that the attorney has apparent authority to do so in an out-of-court proceeding."

Citing Gravens v. Auto-Owners Ind. Co., 666 N.E. 2d 964 (Ind. Ct. App. 1996), the court wrote, an attorney may not settle a claim without the client's consent.

In this case, Zurich assumed the Nunn office had the authority to approve the settlement, when it in fact did not, the court ruled. The acceptance of the settlement by the claims manager in the Nunn office was not binding upon the Bays. The Court of Appeals reversed the order of the Marion Superior Court and remanded for further proceedings.

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  1. This is ridiculous. Most JDs not practicing law don't know squat to justify calling themselves a lawyer. Maybe they should try visiting the inside of a courtroom before they go around calling themselves lawyers. This kind of promotional BS just increases the volume of people with JDs that are underqualified thereby dragging all the rest of us down likewise.

  2. I think it is safe to say that those Hoosier's with the most confidence in the Indiana judicial system are those Hoosier's who have never had the displeasure of dealing with the Hoosier court system.

  3. I have an open CHINS case I failed a urine screen I have since got clean completed IOP classes now in after care passed home inspection my x sister in law has my children I still don't even have unsupervised when I have been clean for over 4 months my x sister wants to keep the lids for good n has my case working with her I just discovered n have proof that at one of my hearing dcs case worker stated in court to the judge that a screen was dirty which caused me not to have unsupervised this was at the beginning two weeks after my initial screen I thought the weed could have still been in my system was upset because they were suppose to check levels n see if it was going down since this was only a few weeks after initial instead they said dirty I recently requested all of my screens from redwood because I take prescriptions that will show up n I was having my doctor look at levels to verify that matched what I was prescripted because dcs case worker accused me of abuseing when I got my screens I found out that screen I took that dcs case worker stated in court to judge that caused me to not get granted unsupervised was actually negative what can I do about this this is a serious issue saying a parent failed a screen in court to judge when they didn't please advise

  4. I have a degree at law, recent MS in regulatory studies. Licensed in KS, admitted b4 S& 7th circuit, but not to Indiana bar due to political correctness. Blacklisted, nearly unemployable due to hostile state action. Big Idea: Headwinds can overcome, esp for those not within the contours of the bell curve, the Lego Movie happiness set forth above. That said, even without the blacklisting for holding ideas unacceptable to the Glorious State, I think the idea presented above that a law degree open many vistas other than being a galley slave to elitist lawyers is pretty much laughable. (Did the law professors of Indiana pay for this to be published?)

  5. Joe, you might want to do some reading on the fate of Hoosier whistleblowers before you get your expectations raised up.